CDBG funds may not be used to reduce a jurisdiction's stock of affordable housing. All occupied and vacant occupiable low/moderate-income dwelling units that are demolished or converted to a use other than as low/moderate-income dwelling units in connection with an activity assisted with CDBG funds must be replaced with low/moderate-income dwelling units.
Definitions
- Low/moderate-income dwelling unit: a dwelling unit with a market rent (including utility costs) that does not exceed the applicable Fair Market Rent for Section 8 existing housing, except that the term does not include a unit that is owned and occupied by the same person before and after the assisted rehabilitation.
- Market rent: generally the actual rent a tenant pays may be assumed to be the market rent except when rent is reduced to compensate tenant for service provided. For owner-occupied property, one for one replacement does not apply if occupied by the owner before and after rehab.
- Vacant occupiable dwelling unit: a vacant dwelling unit that is in standard condition, or; a vacant dwelling unit that is in substandard condition but is suitable for rehabilitation, or; a dwelling unit in any condition that has been occupied at any time within the three (3) months before the date of the execution of the agreement.
- Comparable dwelling unit: a unit which is decent, safe and sanitary and functionally equivalent to the unit to be demolished or converted.
Which Dwelling Units Must Be Replaced?
Units which meet all of the following criteria must be replaced.
- Before demolition or conversion the market rent including utilities did not exceed the fair market rents (FMR) established by HUD for the Section 8 existing housing program;
- The dwelling unit is either occupied or is a vacant occupiable dwelling unit, except for units that are owner occupied before and after rehab;
- The dwelling unit is either going to be demolished OR converted so that it no longer serves as permanent housing.
Note: Anytime a structure is converted from permanent housing, whether owner or tenant occupied, to emergency housing, it is considered a public facility and the units must be replaced.
Prior to committing any funds that will result in the demolition or conversion of low/moderate income dwelling, the grantee must make public by publication in a newspaper of general circulation and submit to the Department of Local Affairs the following:
- a description of the proposed activity
- location on a map and number of dwelling units by size that are affected
- time schedule for commencement and completion of demolition or conversion
- location on a map of replacement dwelling units by size
- source of funding and time schedule for replacement (replacement housing must be initially made available for occupancy at any time during the period beginning one year before the grantee's submission of this information and ending three years after the commencement of demolition or conversion)
- basis of ensuring that replacement units will remain low/moderate for at least 10 years from initial occupancy.
- if any proposed replacement units are smaller than previous units, information demonstrating that it is consistent with the housing needs of lower-income households in the jurisdiction
Examples Which Trigger One-for-One Replacement Requirement:
- An apartment building with units in standard condition and rents below FMR is converted to an emergency shelter for the homeless using CDBG funds must have the units replaced.
- A seriously dilapidated unit that is vacant for less than three (3) months before remodeling with CDBG funds into emergency housing for homeless with a market rent below fair market rent, must be replaced.
- A dwelling unit that was owner-occupied before CDBG demolition and comparable units had a market rent below FMR must be replaced, except units that are owner occupied.
- An occupied dwelling unit that was below FMR before CDBG rehab and above FMR after rehab must be replaced.
- A dwelling unit that was substandard but suitable for rehab, vacant for two years and had a market rent below FMR prior to conversion and was converted with CDBG into commercial space must be replaced.
Note: The income of the particular owner-occupant or renter is irrelevant in one-for-one replacement.
What Counts as a Replacement Dwelling Unit?
Replacement of low/moderate-income dwelling units may be provided by any public agency or private development and must meet all of the following criteria:
- Replacement units must be located within the grantee's jurisdiction and, to the extent feasible, be located within the same neighborhood as the units replaced.
- Replacement units must be sufficient in number and size to house no fewer than the number of occupants who could have been housed in the units that were demolished or converted (determined in accordance with applicable local housing occupancy codes.) The grantee may not replace demolished or converted units with smaller units. For example, a two bedroom unit cannot be replaced with two one bedroom units, unless before committing funds, the grantee has provided information to citizens and to the state demonstrating that the proposed replacement is consistent with the housing needs of lower-income households in their jurisdiction.
- The grantee cannot count rehabilitation of owner-occupied units as replacement units. The grantee cannot count rehabilitation of tenant occupied units as replacement units unless:
- the unit was raised from substandard to standard condition, and
- no person was displaced from the unit as a direct result of the activity, and
- the unit was vacant for at least three months before the execution of the agreement between the grantee and the property owner.
- Replacement units must be made available for occupancy at any time during the period beginning one year before the grantee submits the necessary information to the public and the Department of Local Affairs and ending three years after the start of the demolition or conversion.
- Replacement units must be designed to remain low/moderate-income dwelling units for at least 10 years from the date of initial occupancy. They may include, but are not limited to, public housing or existing housing receiving Section 8 project-based assistance.
One-for-One Replacement – Minimum Recordkeeping Requirements
- Provide necessary documentation to support the local jurisdictional One for One Replacement policy.
- Written plan for keeping the units at or below Fair Market Rent for at least 10 years is developed and maintained for public access.
- Provide documentation of steps taken to assure replacement units will remain low/moderate for at least the next 10 years from the date of initial occupancy.